Tech Funds Rebound on Earnings Surprises

Investors last week shifted money from money market funds and U.S. Treasuries to technology stocks as some companies' fourth-quarter earnings beat expectations.

The average technology fund we track gained 2.5% in the five trading days ending Feb. 5, excluding inverse funds that sell short technology and Internet stocks.

Amazon.com ( AMZN), which surged 26.4% in the five trading days, had its best holiday season ever. In the latest quarter, the company increased net income by 8.7% to $225 million from a year earlier on $6.7 billion in sales, up 18%.

Adding to its sales of digital music and videos, Amazon.com has expanded its offerings to include a library of more than 600 casual games at a sub-$10 price point. The company also will begin collecting payment-processing fees on its Amazon Flexible Payments Service in June.

At 34.4% of assets, Amazon.com is the largest holding of Internet HOLDRs Trust ( HHH), the best-performing technology fund, gaining 11.7% last week. Yahoo! ( YHOO), the fund's second-biggest holding, rose 15.1% after it announced it was shutting its "Briefcase" storage service. eBay ( EBAY), up 7.8% for the period, integrated its payment-processing system with Moneybookers USA.

Standouts among the holdings include Micron Technology ( MU), up 14%; Nvidia ( NVDA), up 13%; and Texas Instruments ( TXN), up 12.6%. Judicial proceedings in Rambus' ( RMBS) patent case were halted as the claims were deemed to be "unenforceable" against Micron.